Analysis

The most intense pressure in the eurozone financial crisis may have eased, but there is a still a heavy agenda to work through.

There is certainly a perception that some of it has been on hold until after the German election.

There's a real chance that further bailouts will be needed - a second for Portugal and a third for Greece. So far the financial assistance has come in the form of loans, but Greece in particular could need debt relief.

There is also the eurozone's banking union project. One element is a central authority for dealing with struggling banks.

The plan is for the banks themselves to finance it, but in the early stages it could need taxpayers' money. None of this will be popular in Germany, but it is perhaps the price of underpinning the eurozone.

Greeks blame austerity measures for an unemployment rate that has risen to almost 28%.

"There is little joy here at the prospect of another four years of Mrs Merkel," says BBC Athens correspondent Mark Lowen.

Greece needs an extra 10bn euros of funding from its creditors next year and now the German election is over those talks can begin.

The Greek government says the country cannot take any more austerity and needs debt relief by lowering interest rates or extending the repayment period of its loans.

Some Greeks hope that Chancellor Merkel will invite Peer Steinbrueck of the Social Democrats (SPD) into a coalition.

He has criticised austerity and called for more growth measures to help this debt-stricken economy.

But Mark Lowen says: "It's unlikely that there'll be any significant change of policy from Berlin, particularly as Chancellor Merkel's handling of the euro crisis proved so popular with her voters."

Chancellor Angela Merkel's conservative party took about 42% of the vote, but finished just short of an absolute majority, official results show.

But she might yet have to seek a grand coalition with the Social Democrats (SPD) who won about 26% of the vote.

"The result of Germany's election is, first and foremost, a big vote of confidence in Merkel and her handling of the eurozone crisis," said Nicholas Spiro, who runs his own research firm, Spiro Strategy.

"No other leader of a major economy has been able to reap more political dividends from an international financial and economic crisis."

Other business

As well as Greece, Chancellor Merkel's victory could also allow Europe to make progress on other pressing issues.

Portugal's financial situation remains precarious and the government is pushing for the target on its government finances to be eased.

Last week, credit rating agency S&P said there was an increased likelihood that Portugal might need another bailout.

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Steve Evans considers how Germany's economic policy might change following the election result

Progress on the eurozone's banking union project has also been disrupted.

The project has been designed to make the financial sector more resistant to future crises and involves the creation of a central agency to deal with failed banks.

The agency will need some financial backing in its early years, but Germany has so far been reluctant to provide that support.

"The most intense pressure in the eurozone financial crisis may have eased, but there is a still a heavy agenda to work through," said BBC Economics Correspondent, Andrew Walker.

"None of this will be popular in Germany, but it is perhaps the price of underpinning the eurozone," he said.

'Cautiously optimistic'

Market reaction to Mrs Merkel's victory has been muted, as investors wait to see what kind of coalition emerges after the election.

"It will be tough to buy the euro strongly on the German elections as it will be some time before we know what kind of coalition we will get," said Antje Praefcke, currency strategist at Commerzbank in Frankfurt.

"Sentiment is cautiously optimistic, dependent on data.

"A coalition with the SPD should result in euro-friendly and peripheral [nation] friendly policies," she said.

Germany's economy has been leading Europe out of recession, and during the April to June quarter it grew by 0.7%.

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